Postal Service 3Q loss shrinks to $740 million

Aug. 9, 2013 - 06:00AM
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(Postal Service)

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The U.S. Postal Service reported a net loss of $740 million for the third quarter of fiscal 2013, as a gain in operating revenue was not enough to offset a legal requirement to book expenses for “pre-funding” future retiree health care. During the same three-month period from April through June last year, the mail carrier lost $5.2 billion.

For this latest quarter, mail volume totaled 37.9 billion pieces, down about one percent from last year, although profitable first-class mail volume fell 3.4 percent, the agency said in the quarterly financial report released Friday. But the $16.2 billion in operating revenue represented a 3.6 percent increase from last year as the Postal Service’s shipping and package business continued to thrive.

The report shows a 19 percent drop in operating expenses to $16.9 billion, aided by a favorable change in interest rates that drove down long-term workers’ compensation costs by $918 million. The agency also touted the impact of workforce reductions and other downsizing steps.

The bulk of the decrease, however, stems from the fact that the Postal Service is having to book only one annual installment for future retiree health care, compared to two last year. That $5.6 billion installment is due at the end of next month, but — as it has the last two years — the Postal Service plans to default, citing a lack of cash.

Without workers’ comp and retiree health care pre-funding, the Postal Sevice’s net loss would have been $120 million, compared to $322 million last year, according to the report. In a statement, the head of the National Association of Lettter Carriers blamed all of the red ink for the first nine months of the fiscal year on the pre-funding rquirement and urged Congress to focus on eliminating that mandate, rather than allow the agency to end Saturday mail delivery.

“The path to profitability is clear,” NALC President Fredric Rolando said in the statement. “Address the pre-funding fiasco and give the Postal Service the freedom to innovate and grow in the digital era.”

But halting Saturday mail delivery would save about $2 billion annually, according to USPS leaders, who have made that step a centerpiece of their five-year plan for fostering financial stability. “Fundamental changes” are needed, Joe Corbett, the Postal Service’s chief financial officer, said in a separate statement.“However, without comprehensive postal reform legislation signed into law, our hands are tied and we expect multi-billion dollar annual losses to continue.”

While both House and Senate members have introduced bills that would reshape USPS operations — potentially including an end to Saturday mail delivery — neither fully adopts the Postal Service’s five-year plan or is close to becoming law.